Overtime Exemption Increase on Hold

As of last week, a federal judge in Texas ruled that the anticipated December 1, 2016 increase in the minimum salary level for exempt employees is to be put on hold – nationwide. The scheduled increase was set to raise the salary threshold under which employers designated workers as “exempt” from overtime and breaks from $455 per week ($23,660 annually) to $921 per week ($47,892 annually).

Twenty-one states and the U.S. Chamber of Commerce brought suit claiming that the Department of Labor exceeded its authority by raising the salary threshold. The Fair Labor Standards Act originally enacted the exemption requirement by focusing on the duties, not salaries, of such positions. The court agreed that the December 1 increase focused mainly on salary thresholds instead of job duties that might qualify employees for the exemption and granted an injunction to prevent the increase from taking effect as scheduled.

For now, employers should continue to follow the existing overtime regulations and check back to see if the overtime rule will be implemented at a later date. If employers have already provided salary increases to employees in order to maintain exempt status, employers may want to postpone decisions to undo such increases until the court reaches a final decision.